Lehman's capital needs spark return of credit jitters!
SAN FRANCISCO, California - June 4, 2008 - Worries about the health of the U.S. financial system, on the decline since mid-March, have snapped back as investors brace for more big loan losses at Lehman Brothers and other large investment banks.
The cost of buying insurance against bond defaults, one measure of investor fears of credit risk, have been rising for large, investment-grade companies in the last two weeks. That's a reversal of a trend in place since mid-March, when the Federal Reserve's landmark decision to help bail-out Bear Stearns Cos. knocked down mounting fears of a Wall Street meltdown.
"There are some concerns rising a little bit again on the back of Lehman's possible quarterly loss as well as the loss at British lender Bradford & Bingley," said Juan Valencia, credit analyst at Societe Generale in London. "The fears are about what banks have on their balance sheets, what they haven't disclosed, whether there are more writedowns coming," he said.
